Global financial markets ended 2010 with a positive tone

_*Global financial markets ended 2010 with a positive tone, with
strength across global equity, commodity and credit markets throughout
the month of December.*_

Fixed income yields rose despite continued subdued inflationary
pressures, measures of manufacturing and employment improved while the
US dollar declined against most major currencies. The HFRI Fund
Weighted Composite Index gained 3.15% for the month, bringing full
year performance to a gain of 10.42%; all strategies had a positive
contribution for the month, with the most significant gains in Macro
and Equity Hedge strategies.

Macro funds posted the strongest gains of the strategies with a
contribution from equities and commodities as both fixed income and
volatility declined. The HFRI Macro (Total) Index posted a gain of
3.73%, bringing its performance YTD to 8.41%. Both Discretionary and
Systematic strategies had similar positive contributions, with short
fixed income, long commodity and short US dollar positions
contributing to gains for the month. Recovering from November's
losses, persistent trends across many asset classes contributed to a
gain of 4.45% for the HFRI Macro: Systematic Diversified Index, with
these ending 2010 with a gain of 9.48%.

The HFRI Equity Hedge (Total) Index posted a gain of 3.46%, with
strong contributions from Fundamental Growth, Energy/Basic Materials
and Emerging Markets exposures. The HFRI EH: Energy/Basic Materials
Index gained 4.71%, bringing full year 2010 performance to 15.98%,
eclipsing several other strategy indices to become the leading areas
of hedge fund performance for the year. Gains across Equity Hedge were
strong across nearly all sub-strategies with Quantitative Directional,
Technology/Healthcare and Equity Market Neutral all contributing
positively. Short Bias funds once again posted a sharp loss, with
these declining by 8.51%.

The HFRI Event Driven (Total) Index posted a gain of 2.77%, with all
sub-strategies having positive contributions led by gains in Special
Situations and Activist funds. Risk tolerance declined and capital
market issuance and strategic acquisition activity remained strong,
contributing to gains of 3.82% in Special Situations and 2.68% in
Distressed/Restructuring; Merger and Credit Arbitrage also posted
gains for the month.

The HFRI Relative Value (Total) Index posted a gain of 1.41%, the
seventh consecutive monthly gain and 23rd in last 24 months, ending
2010 with a gain of 11.81%. All Relative Value sub-strategies
contributed tvo gains, with Fixed Income Corporate, Multi-Strategy and
Yield Alternatives having the most significant positive contributions.
Yields rose as investors shifted to riskier assets, offsetting fixed
income losses with spread gains. Fixed Income: Asset Backed funds
added 0.98% to end 2010 with a gain of 14.32%, while FI: Corporate
posted a gain of 1.93% for December and credit-focused Multi-Strategy
funds gained 1.95%.
The HFRI Fund of Hedge Funds Index posted a gain of 1.97%, while the
HFRI Emerging Markets Index gained 2.77%, with the largest
contributions from fund exposure in Russia/Eastern Europe and the
Middle East.